The African Internet economy has the potential to reach $180 billion by 2025, accounting for 5.2% of the continent’s gross domestic product (GDP).
This according to a new report released by Google and the International Finance Corporation (IFC) which also estimates that by 2050, Africa’s Internet economy could reach $712 billion, 8.5% of the continent’s GDP.
The report says driving this growth is a combination of increased access to faster and better quality Internet connectivity, a rapidly expanding urban population, a growing tech talent pool, a vibrant startup ecosystem, and Africa’s commitment to creating the world’s largest single market under the African Continental Free Trade Area.
Currently, Africa is home to 700,000 developers and venture capital funding for startups has increased year-on-year for the past five years, with a record $2.02 billion in equity funding raised in 2019, according to Partech Ventures Africa.
The report also notes that women comprise one in five of the total population of developers in Africa. However, while this number is still low, the growth of the ecosystem has begun creating many opportunities for women coders, especially in Egypt, Morocco, and South Africa
“The digital economy can and should change the course of Africa’s history. This is an opportune moment to tap into the power of the continent’s tech startups for much-needed solutions to increase access to education, healthcare, and finance, and ensure a more resilient recovery, making Africa a world leader in digital innovation and beyond,” said Stephanie von Friedeburg, Interim Managing Director, Executive Vice President and Chief Operating Officer of IFC.
Digital startups in Africa are driving innovation in fast-growing sectors, including fintech, healthtech, media and entertainment, e-commerce, e-mobility, and e-logistics, contributing to Africa’s growing Internet gross domestic product (iGDP) — defined as the Internet’s contribution to the GDP.
Google Africa director Nitin Gajria said, “Google and IFC have created this report to highlight the role the digital startup sector is playing and other factors driving the continent’s growth, in order to showcase and support the opportunities the continent presents.”
An analysis within the report, conducted by Accenture, found that in 2020, the continent’s iGDP may contribute approximately $115 billion to Africa’s $2.554 trillion GDP (4.5% of total GDP). This is up from $99.7 billion (3.9% of total GDP) in 2019, with the potential to grow as the continent’s economies develop.
Investments in infrastructure, consumption of digital services, public and private investment, and new government policies and regulations will play an important role in supporting Africa’s digital growth.
The report notes that investment in digital skills will also need to increase in order to help drive technology usage and continue to grow the continent’s talent pool.